The Insolvency Service of Ireland has released some useful real life examples of debt write off – and the figures might surprise some people.Debt Settlement Arrangement
One example was of a a female aged 37, married, employed on a part
time basis, with one child in preschool and
another in primary school .
In this case she had debts of €31,534 (unsecured bank loans and credit card debts) . She had assets of a car worth €500 and €348 cash in the bank . Her monthly net income was €1209 and her “reasonable living expenses” came to €1980 when rent costs were included. This meant her income was €771 a month below her assessed needs. (before any debt repayments)
In cases of debts over €30k – the applicant would typically be just considered for bankruptcy. However she was able to get a lump sum of €9,500 from a relative to make available to her creditors
and to cover her PIP’s fee. This payment was split between the creditors and 77% of the debtor’s debt was written off. (€24000).

There were 523 cases in progress – (320 PIAs, 121 DSAs and 82 DRNs).
The total debt involved in these cases is approximately €193 million.

Just 70 Protective Certificates were issued by the Courts. (Protective Certificates give protection to debtors against legal action by creditors for a period and allows a Personal Insolvency Practitioner 70 days in which to develop an arrangement).

There were 66 bankruptcies in the first Quarter of 2014. (Total of 76 since the rules were changed_

The ISI say they have received almost 11,000 telephone calls to its information line and 2,500 email enquiries.

The Insolvency Service of Ireland (ISI) announced that it will start accepting applications on Monday the 9th of September.
from authorised Personal Insolvency Practitioners and Approved Intermediaries for the new debt reliefs on behalf of insolvent debtors under the Personal Insolvency Act.

It will soon be possible , under new Personal Insolvency Legislation , to get certain debts of up to €20,000 completely written off in Ireland. From September – people can apply for a Debt Relief Notice (DRN) and be debt free after 3 years.

Who is Eligible?

Debt Amounts – only debts of less than €20,000 can be covered by a Debt Relief Notice (DRN). If you have bigger debts you need to look into a Debt Settlement Arrangement.

Types of Debts – Debts that can be written off under a DRN include ; Credit Card Debts, Store Card Debt, Overdrafts , Personal Loans , Credit Union Loans , Utility bills . (All unsecured) .Mortgage debts and other secured debts are not covered by DRNs

The following type of Debts can be included in a DRN but only if the creditor agrees: Taxes, duties, levies payable to the State ; Local government charges/rates/household charges ; Amounts due to the HSE under the Nursing Home Support Scheme ; Service charges to owner’s management companies ; Social Welfare Overpayments

Note – Applicants must not have incurred 25% or more of these debts during the past 6 months

Assets: You are not eligible for a DRN if you own assets (including property) valued at more than €400. So homeowners are not eligible for this type of debt relief.

But – these assets are not counted :
1 item of jewellery worth €750 or less
1 motor vehicle worth €2000 or less
Reasonably necessary household furniture/tools worth less than €6,000

Income Levels– Your monthly Disposable Income needs to be below specified guidelines – which depend on the size of your household. Disposable Income is defined as Gross Income less :-
Income tax,
Social insurance contributions (PRSI/USC) ,
Reasonable Rent Payments ,
Payments of debts that are excluded from the DRN.

These are some examples of the maximum Income levels for different households that would allow them to be eligible for a DRN: (This is after payment of Rent)

These amounts are calculated from the ISI reasonable living expenses guidelines for households with a car ( plus the €60 DRN “allowance”) Note : We have included Child Benefit as income because we haven’t reduced the reasonable living expenses to take account of Child Benefit

SO – using an example listed above
A couple with 2 secondary school children who are renting a house for €800 a month would be eligible for a DRN if their net income was less than €2439 + €800 = €3239 a month.
Take out the €260 child benefit – leaving €2979 a month.
A take home pay of €2979 a month equates to roughly €43000 annual gross income for a single earner couple.

If this couple have debts of under €20000 they could get them all written off in 3 years. (As long as their assets are no more than €400 plus 1 item of jewellery worth €750 or less plus 1 motor vehicle worth €2000 or less , plus household furniture/tools worth less than €6,000)

If someone on a DRN has an increase in monthly net income of €400 or more; or they receive a gift or sum of money of €500 or more – they have to give 50% to the ISI for the benefit of their creditors.

Once a Debt Relief Notuce is issued it lasts for 3 years – none of the creditors listed in the DRN can can pursue you for the debts you owe them that are specified in the DRN. At the end of the 3 year period, all debts listed in the DRN will be written off in full.

This week the the director of The Insolvency Service of Ireland (ISI) , Lorcan O’Connor , updated the Oireachtas Joint Committee on Finance, Public Expenditure and Reform on the latest ISI progress and targets.

He told them that he expects the ISI to be in a position to accept applications from the public in mid-August, ( five months after the establishment of the service).

Applications to become Personal Insolvency Practitioners (PIPs) and Approved Intermediaries (AIs) are already being processed and they will be authorising some by the end of July. People will then be able to meet authorised practitioners straight away.

The Insolvency Service’s IT system is still not fully operational. By the 19th July complete end-to-end testing of IT systems is due to start and will involve involving MABS, potential PIPs and the Courts Service.

There are still some provisions of the Personal Insolvency Act that have not being signed into Law .

The ISI expect that the first Debt Relief Notices (DRN) will not be issued until early September 2013 . It will be Septyember too before the first Protective Certificates will be issued ( These will cover people applying for a Debt Settlement Arrangement (DSA) or a Personal Insolvency Arrangement (PIA).

The Insolvency Act will introduce 3 new debt resolution mechanisms to help mortgage-holders and other people with unsustainable debt to reach agreements with their creditors. It will probably be July before anyone can apply for any of these.

The three proposed new mechanisms are summarised below : Click on the links to find out more about each of them

A Debt Relief Notice (DRN) to allow for the write-off of debt (generally unsecured ) up to €20,000, subject to a 3-year supervision period

Some of the big financial companies will be trying to get some of the personal insolvency work in Ireland now that the new Personal Insolvency legislation is going to be implemented.

Anyone applying for the Debt Relief Notice (on debts under €20k) will not pay any fees.
The more complex DSA and PIA will require the involvement of a Personal Insolvency Practitioner – and they can charge fees. It is the creditors who will pay the fees (the people or companies that are owed the money).How much will the Fees be ? In in one of the examples on the Insolvency Service website – the PIP fees were estimated at €12000 over 5 years. This was for a Personal Insolvency Arrangement for a couple. In the example the unsecured creditors were owed around €90000 – but at the end of 5 years they will only get just over €18000 back. The PIP gets two thirds of what the creditors get – and over €72000 is written off.

In another example of a PIA – the estimated PIP fees were €5100 over 5 years.
An example of a DSA involving debts of €80000 – the PIP fees were estimated at €4000 over 5 years.

Approved Intermediary Service is established in MABS to provide Debt Relief Notices under the Personal Insolvency Service

A Debt Relief Noticeis designed for people who have very low disposable income and little assets, and will allow for the write-off of qualifying debt up to €20,000, subject to a three-year supervision period.

To obtain a Debt Relief Notice, an application must be made through an Approved Intermediary. MABS will be providing an Approved Intermediary service to process applications for Debt Relief Notices

The Citizens Information Board together with MABS, is working closely with the Insolvency Service to put the Approved Intermediary Service in place. Sixteen temporary money advice staff have been recruited to facilitate the rollout of the service within MABS.

A regionally based Approved Intermediary Service Transition Unit (AISTU) has been established and all Money Advice Co-Ordinators and one Money Advisor in each of the 51 local MABS companies around the country are being trained as Approved Intermediaries to ensure that the service will be available nationwide from the outset.